Navy inks two-carrier deal with HII, cites $4B savings

The Navy on Thursday signed a deal for the bulk purchase of two nuclear-powered aircraft carriers, a move that will reportedly save $4 billion over the long term and boost the fortunes of Newport News Shipbuilding.

The $15.2 billion agreement allows construction to proceed on the future USS Enterprise, now undergoing advance work at the shipyard, and an as-yet-unnamed carrier known as CVN-81.

The ships are the third and the fourth of the Gerald R. Ford class. The ships are scheduled to be delivered in 2028 and 2032, respectively.

The deal advances the Navy’s goal of a larger and more lethal fleet, saves taxpayer money and stabilizes the shipbuilding industry, said James F. Geurts, assistant secretary of the Navy for research, development and acquisition.

Bulk aircraft carrier purchases are rare but not unprecedented. The carriers Theodore Roosevelt and George Washington were purchased in fiscal year 1983; the John C. Stennis and Harry S. Truman were ordered in 1988.

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With a two-carrier contract in hand, the shipyard can achieve economies of scale by purchasing supplies and services in advance, said shipyard President Jennifer Boykin.

With no downtime between construction of two ships, the company can avoid drop-offs in workload that in the past have resulted in layoffs, only to be followed by more hiring.

Boykin said the benefits of the deal will ripple out beyond aircraft carriers.

“The stabilizing effect this contract has on the naval nuclear shipbuilding supply base will positively impact other programs,” she said. That includes construction of Virginia-class and Columbia-class submarines at Newport News.

The $15.2 billion is actually a modification to an existing contract for the Enterprise. More awards will follow as construction proceeds. Ford-class carriers cost in neighborhood of $11-12 billion each.

Lessons learned

The first ship in the class, the USS Gerald R. Ford, had seen a steady stream of technological problems from construction through delivery to the Navy. It is currently undergoing post-shakedown work at Newport News.

Geurts was asked why the Navy has committed to a third and fourth ship when problems still remain with the first ship. He said the Navy was confident in the overall design of the ship and its subsystems.

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He noted that the shipyard has learned lessons from building the Ford that it has applied to the second ship, the John F. Kennedy. The labor savings on Kennedy is about 16 percent when compared to Ford. Those lessons learned will pay dividends as construction progresses on other Ford-class carriers.

The Newport News yard, a division of Huntington Ingalls Industries, is the only U.S. shipyard capable of designing, building and refueling nuclear-powered aircraft carriers.

Boykin said the two-carrier deal is a statement of confidence on the Navy’s part that brings “tremendous pride” to shipbuilders, who “know that the Navy recognizes the talent that we bring and that this is a powerful class of ship that’s a centerpiece to the Navy’s needs.”